Travel compensation fund change unlikely

PUBLISHED : Wednesday, 29 January, 1997, 12:00am
UPDATED : Wednesday, 29 January, 1997, 12:00am

An amendment that seeks to guarantee full compensation to customers whose travel agents go bust is likely to be rejected by the Legislative Council today.

According to the Travel Industry Compensation Fund (Amendment) (No 2) rules, holiday makers will only be compensated for 80 per cent of their payment if a travel company collapses.

Democrat Fred Li Wah-ming is to move a resolution proposing that the rate of ex gratia payment be increased to 100 per cent.

Officials only agreed to increase the rate to 90 per cent, saying full compensation would make consumers 'less prudent in choosing travel agents'.

Full compensation would also lead to cut-throat competition among agencies and collapse of smaller agents.

Mr Li said the argument was not convincing.

'About 80 per cent of the business has already been centred on the 10 major agencies here.

However, Chan Kam-lam, of the Democratic Alliance for the Betterment of Hong Kong and chairman of the Legislative Council subcommittee overseeing the amendment, said the prospect of full back-up would encourage reckless operations from travel agencies.

The compensation fund, established in 1988, has accumulated more than $224 million, and only $4.12 million had been paid out by last year.